Legal Tension Mounts for WPP, Benatti

NEW YORK In an unusual twist, WPP Group has requested that a London High Court overturn last week’s ruling, in favor of the U.K. holding company, in its first round of litigation against Marco Benatti. In January, WPP dismissed the former Italian country manager because of alleged financial irregularities.

Lawyers for Benatti, meanwhile, quickly responded by saying they will ask Consob, the Italian stock market regulator, to investigate WPP for market manipulation. Benatti is in the middle of a takeover bid for Italian marketing firm Fullsix, in which WPP is also a shareholder. (The bid ends Friday, March 17.)

On March 8, the court found in WPP’s favor in its breach-of-contract suit against Benatti.

Benatti alleges that over the weekend, WPP spread word to journalists of his “guilt,” as determined by what his lawyers now call an “irregular ruling,” sources said.

WPP explained its request to the High Court this way: “The High Court has been asked by WPP to set aside the default judgment obtained on the 8th of March 2006 against Benatti to allow him time to file with the court a valid acknowledgement to the proceedings,” said a WPP representative. “The original acknowledgement lodged by Benatti was rejected by the court as being defective. Once Benatti lodges a valid acknowledgement the litigation will proceed in the usual way.”

Last week, WPP won by default, because Benatti and his lawyers were not present in court. Benatti’s Italian lawyers, now working with counterparts in the U.K., questioned whether the ruling was binding, because both parties were not in the courtroom, sources said. Benatti, who was served an Italian translation of the ruling on Saturday, contends he had more time to appear before the court and the ruling last week preempted that appearance, sources said.

In last week’s judgment, the court said Benatti must repay $246,378, the 1 percent commission the executive earned for advising WPP on the acquisition of Italian media-buying agency Media Club. (WPP alleges that Benatti had an undisclosed stake in Media Club. Benatti counters that he held only a small, indirect stake in Media Club through an offshore fund.)

The court said Benatti might also be liable for additional damages related to the ruling about breach of contract and failure of fiduciary duties, an assessment to take place at a future date. The ruling directed Benatti to pay WPP’s legal costs.

Benatti, who denies any improprieties while employed by WPP, filed a countersuit against the company in Italy last month.

This story updates an item posted earlier today with the news that Benatti’s lawyers will ask Consob, the Italian stock market regulator, to investigate WPP for market manipulation.